Magazine article Insight on the News

Fallout from the Tobacco Wars Creates Smoke Screen for Taxation

Magazine article Insight on the News

Fallout from the Tobacco Wars Creates Smoke Screen for Taxation

Article excerpt

As they watched Senate Republicans snuff out the tobacco bill, Democrats declared that they'll make the bill's death a major issue in November's elections.

For politicians who favor increased government activism, cigarettes are an easy target. Of every 1,000 smokers, it's estimated that 250 will be killed by tobacco, 10 will be murdered and 20 will die in traffic accidents. If lousy driving and homicide are the government's business, why not Marlboros?

"I have every sympathy with the American who was so horrified by what he had read of the effects of smoking that he gave up reading," said Lord Conesford. And a horror story it is: About 3,000 American kids light up for the first time every day, more than 1 million per year, causing one-fourth to one-third to die prematurely. Overall, smoking results in 500,000 preventable American deaths annually, 10 times the total number of U.S. soldiers killed in Vietnam, and worse than World War II's 407,000 American deaths.

In June 1997, the original tobacco legislation called for the industry to restrict advertising and pay $368 billion during 25 years in return for protection against an onslaught of lawsuits -- a deal roundly attacked by Democrats and public-health groups as too lenient.

By June 1998, the Senate's bill called for tax hikes of $885 billion during 25 years -- the second-largest tax increase in U.S. history, figured on an annual basis, exceeded only by the $240 billion five-year tax hike signed by President Clinton in 1993. On top of current per-pack taxes of 24 cents by the federal government and an average of 35 cents by the states, the Senate's bill would have tacked on another $1.10 per pack. To discourage teens from smoking, in short, two adults in a two-pack-a-day household would see their taxes jump by $800 a year, and most of that increased tax burden would be paid by those who can least afford it. To compensate, the bill proposed a middle-class tax cut of $300 by the year 2008.

Those making less than $30,000 will pay 59 percent of the tax, says Bruce Josten, executive vice president of the U.S. Chamber of Commerce, and much of that will be transferred to wealthy lawyers. In the cigarette-companies lawsuit settlement in Texas, for example, Cardozo law professor Lester Brickman reports that plaintiffs' lawyers will pocket $92,000 an hour; in Florida, $25,000 an hour. The problem is not just that a thousand lawyers will buy Lear jets, but that they'll buy legislatures, Brickman warns. And even more judges than they already own, adds National Review reporter Ramesh Ponnuru. …

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